Item 7. Management’s Discussion and Analysis
of Financial condition and results of operations
The following Management’s Discussion and
Analysis (“MD&A”) is intended to help the reader understand our results of operations and financial condition.
The MD&A is provided as a supplement to, and should be read in conjunction with financial statements and the accompanying notes to
the financial statements included in this Form 10-K.
Our discussion and analysis of our financial condition
and results of operations is based on our financial statements, which have been prepared in accordance with accounting principles generally
accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that
affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. Management
bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Overview
We are a developer of semi-transparent electricity-generating
coatings, and methods for their application to various materials (collectively, “LiquidElectricity® Coatings”).
When applied in ultra-thin layers to rigid glass, and flexible glass and plastic surfaces our LiquidElectricity® Coatings transform
otherwise ordinary surfaces into photovoltaic devices capable of generating electricity from natural sun, artificial light, and low, shaded,
or reflected light conditions while maintaining transparency.
35
We have overcome major technical challenges and achieved
many important milestones resulting in an expansion of the potential applications of LiquidElectricity® Coatings which span multiple
industries, including architectural, automotive, agrivoltaic, aerospace, commercial transportation and marine. Our LiquidElectricity®
Coatings are under development with support from commercial contract firms and at the U.S. Department of Energy’s National Renewable
Energy Laboratory, through Cooperative Research and Development Agreements.
We do not currently have any commercial products and
there is no assurance that we will successfully be able to design, develop, manufacture, or sell any commercial products in the future.
Our product development programs involve ongoing R&D and product development efforts, and the commitment of significant resources
to support the extensive invention, design, engineering, testing, prototyping, and intellectual property initiatives carried out by our
contract engineers, scientists, and consultants.
We plan to market any SolarWindow® Products we
commercialize through co-marketing and co-promotion, licensing, and distribution arrangements with third party collaborators, to advance
the technical development and subsequent commercialization of our SolarWindow® products. We are actively seeking additional technology
and product licensing, joint venture arrangements, and manufacturing process integration relationships with commercial partners and industry;
and organizations which have established technical competencies, market reach, and mature distribution networks in the solar PV, building-integrated
PV, and alternative and renewable energy market industries. We believe that this approach could provide immediate access to existing distribution
channels which can increase market penetration and commercial acceptance of our products and enable us to avoid expending significant
funds for development of a large sales and marketing organization. We have not yet entered into any such arrangements for these services.
We cannot accurately predict the amount of funding,
or the time required to successfully commercialize or fabricate SolarWindow® products. The actual cost and time required to commercialize
our SolarWindow® technology may vary significantly depending on, among other things, the results of our product development efforts;
the cost of developing, acquiring, or licensing various enabling technologies; changes in the focus and direction of our business or product
development plans; competitive and technological advances; the cost of patent filing, prosecuting, defending and enforcing claims; demonstrating
compliance with regulations and standards; and manufacturing, marketing and other costs that may be associated with product fabrication.
Because of this uncertainty, even if financing is available to us, we may secure insufficient funding to effectuate our business and/or
product development plans.
As of August 31, 2025, we had working capital of $6,407,990
and cash of $6,555,642. Based upon current and near term anticipated level of operations and expenditures, we believe that cash on hand
should be sufficient to enable us to continue operations over the next twelve months following the issuance of this Annual Report on Form
10-K.
Management recognizes that in order for us to meet
our capital requirements, and continue to operate, additional financing will be necessary. We expect to raise additional funds through
private or public equity investment in order to expand the range and scope of our business operations. We will seek access to private
or public equity markets but there is no assurance that such additional funds will be available for us to finance our operations on acceptable
terms, if at all. If we are unable to raise additional capital or generate positive cash flow, it is unlikely that we will be able to
continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Trends and Expectations
Product and Brand Development
We plan to increase investments in product and brand
development. We actively evaluate potential acquisition opportunities of companies that complement our business and have the potential
to improve our planned products and supply chain efficiencies.
36
Global Economic Disruption
While at present the majority of our products are
sourced either in the United States or China, the military conflict between Russia and Ukraine may nonetheless increase the likelihood
of supply chain interruptions and hinder our ability to find the materials we need to make our products. Thus far, as a result of the
general global economic disruption, we have experienced a decrease in the speed with which we are able to purchase new inventory, as well
as an increase in costs due to delays in shipping, resulting increase in time with which products remain in our warehouse facilities,
thus resulting in reduced profits. In addition, supply chain disruptions may make it harder for us to find favorable pricing and reliable
sources for the materials we need, putting upward pressure on our costs and increasing the risk that we may be unable to acquire the materials
and services we need to continue to make certain products.
Research and Related Agreements
We are a party to certain agreements related to the
development of our technology.
Stevenson-Wydler Cooperative Research and Development Agreement with the Alliance for
Sustainable Energy
On March 18, 2011, the Company and the Alliance for Sustainable Energy
(“ASE”), the operator of the National Renewable Energy Laboratories (“NREL”) under its U.S. Department
of Energy contract, entered into a Cooperative Research and Development Agreement (“CRADA”) to advance the commercial
development of our technology, and on March 6, 2013, the Company and ASE entered into Phase II of the CRADA (collectively, the “NREL
CRADA”). Under terms of the NREL CRADA, NREL researchers make use of our exclusive intellectual property (“IP”),
newly developed IP, and NREL’s background IP in order to work towards specific product development goals established by the Company.
Under the terms of the NREL CRADA, we agreed to reimburse Alliance for Sustainable Energy for filing fees associated with all documented,
out-of-pocket costs directly related to patent application preparation and filings, and maintenance of the patent applications. Beginning
in 2013, under the NREL CRADA, researchers will work towards:
· further improving our technology efficiency and transparency;
· optimizing electrical power (current and voltage) output;
· optimizing LiquidElectricity® Coating performance on flexible substrates; and
Over the course of our collaborative research and development efforts under
the NREL CRADA, both parties have agreed to modifications to extend the period of performance. The current modification extends the period
of performance to December 31, 2028. As of August 31, 2025, the Company had a capitalized asset balance of $30,687 related to deferred
research and development costs for advances to Alliance for Sustainable Energy for work to be performed under the NREL CRADA.
Results of Operations
Comparison of Year ended August 31, 2025 to the year ended August 31, 2024
The following table sets forth our historical operating results from continuing
operations for the periods indicated:
Years Ended August 31, Change Percentage
Operating expenses:
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Selling, General and Administrative
Selling, general and administrative (“SG&A”)
costs include all expenditures incurred other than research and development related costs, including costs related to personnel, professional
fees, travel, public company costs, insurance, and other office related costs. During the year ended August 31, 2025, compared to the
year ended August 31, 2024, SG&A costs decreased by $278,033 or 14% from $2,011,899 during the year ended August 31, 2024 to $1,733,866
during the year ended August 31, 2025. This decrease was primarily due to a decrease in stock compensation ($300,000) and professional
fees ($100,000) offset by increases in personnel costs ($67,000) and other administrative costs ($54,000).
Research and Product Development
Research and Development (“R&D”)
costs represent costs incurred to develop our SolarWindow® technology and are incurred pursuant to our research agreements and agreements
with other third-party providers and certain internal R&D cost allocations. Payments under these agreements include salaries and benefits
for R&D personnel, allocated overhead, contract services and other costs. R&D costs are expensed when incurred, except for non-refundable
advance payments for future research and development activities which are capitalized and recognized as expense as the related services
are performed. During the year ended August 31, 2025, compared to the year ended August 31, 2024, R&D costs increased by $27,897 or
5% from $593,988 during the year ended August 31, 2024 to $621,885 during the year ended August 31, 2025. This increase was primarily
due to an increase in personnel costs ($49,000) offset by a decrease in CRADA costs ($15,000), stock compensation ($2,000) and depreciation
($4,000).
Liquidity and Capital Resources
Our primary cash needs are for personnel, professional
and R&D related fees and other administrative costs. Our principal sources of liquidity are cash and short-term investments. As of
August 31, 2025, and 2024, the Company had cash and short-term investments of $6,555,642 and $4,249,446, respectively. We have financed
our operations primarily from the sale of equity and debt securities.
The following table presents a summary of our cash
flows for the periods indicated:
Years Ended August 31,
Effect of exchange rate changes on cash - (1 ) 1
Operating Activities - Operating activities
consist of net loss adjusted for certain non-cash items, including depreciation, stock-based compensation expense, impairments and the
effect of changes in working capital. The amount of cash used during the year ended August 31, 2025 compared to cash used during the year
ended August 31, 2024 decreased $238,683 due primarily to the receipt of $610,000 related to the refund of an equipment deposit and lower
professional fees offset by higher cash outlays related to personnel, R&D, travel, and changes in working capital.
Investing Activities - We have used cash primarily for liquid short-term
investments. In 2025 and 2024, the Company purchased $4,000,000 and $6,000,000, respectively of term deposits, which matured at varying
dates resulting in the sale of short-term investments of $3,000,000 and $6,500,000 during 2025 and 2024, respectively.
38
Financing Activities – Cash provided by financing activities
increased due to the June 2025 Private Placement whereby the Company sold 12,580,645 units at a price of $0.31 per unit for $3,900,000
in aggregate proceeds. For additional information see the notes to the financial statements, “Note 6 – Common Stock and Warrants.”
Indebtedness
None.
Other Contractual Obligations
None.
Off-Balance Sheet Arrangements
There were no off-balance sheet arrangements for the
years ended August 31, 2025 and 2024.
Recently Issued Accounting Standards
For more information regarding recent accounting standards
and their impact to our results of operations and financial position, see “Note 2- Summary of Significant Accounting Policies”
to our Financial Statements.
Critical Accounting Policies
Management’s discussion and analysis of financial
condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S.
generally accepted accounting principles. The preparation of these consolidated financial statements required the use of estimates and
judgments that affect the reported amounts of our assets, liabilities, and expenses. Management bases estimates on historical experience
and other assumptions it believes to be reasonable under the circumstances and evaluates these estimates on an on-going basis. Actual
results may differ from these estimates. For more information regarding our critical accounting policies, see “Note 2- Summary of
Significant Accounting Policies” to our Financial Statements.
Related Party Transactions
For a discussion of our Related Party Transactions,
see “Note–8 - Transactions With Related Persons” to our Financial Statements included elsewhere in this Annual
Report on Form 10-K.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not carry any balances that are materially
exposed to market risk.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The report of the independent registered public accounting
firm and financial statements listed in the accompanying index are included in Item 15 of this report. See Index to the financial statements
on page F-1 of this Form 10-K.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
ITEM 9A. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain a system of disclosure controls and procedures,
as defined in Rule 13a-15(e) under the Exchange Act, which are designed to provide reasonable assurance that information required to be
disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time
periods specified in the SEC’s rules and forms. In designing and evaluating our disclosure controls and procedures, our management
recognized that any system of controls and procedures, no matter how well designed and operated, can provide only reasonable assurance
of achieving the desired control objectives, as ours is designed to do, and management necessarily was required to apply its judgment
in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls is
also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will
succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes
in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective
control system, misstatements due to error or fraud may occur and not be detected.
39
Under supervision and with the participation of the
Principal Executive Officer and Principal Financial Officer (“Management”), we carried out an evaluation of the effectiveness
of the design and operation of our disclosure controls and procedures for the Company and its subsidiaries as of August 31, 2025.
Based on that evaluation, Management concluded that our disclosure controls and procedures were effective at a reasonable assurance level as
of August 31, 2025.
Management’s Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining
adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Our internal control over financial
reporting is a process designed under the supervision of Management to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of our financial statements for external reporting purposes in accordance with US GAAP. Because of inherent
limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.
As of August 31, 2025, Management assessed the effectiveness
of our internal control over financial reporting using the criteria set forth in Internal Control — Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, Management concluded that our
internal control over financial reporting was effective as of August 31, 2025.
Changes in Internal Control over Financial Reporting
This annual
report does not include an attestation report of our independent registere5d public accounting firm regarding internal control over financial
reporting. Our Management’s report was not subject to attestation by our independent registered public accounting firm pursuant
to the permanent exemption from section 404(b) of the Sarbanes-Oxley Act of 2002 for non-accelerated filers.
There
were no changes in our internal control over financial reporting that occurred during the fiscal year ended August 31, 2025 that have
materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
During the quarter ended August 31, 2025, no director or officer adopted or terminated any
contract, instruction or written plan for the purchase or sale of securities of the Company pursuant to Rule 10b5-1(c) or any non-Rule
10b5-1 trading arrangement (as defined in Regulation S-K Item 408(c)).
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PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names and ages of
all of our directors and executive officers. We have a Board comprised of three members. Each director holds office until a successor
is duly elected or appointed. Executive officers serve at the discretion of the Board and are appointed by the Board. Also provided herein
are brief descriptions of the business experience of each of the directors and officers during the past five years, and an indication
of directorships held by each director in other companies subject to the reporting requirements under the Federal securities law.
Name Age Current Position With Us Director or Officer Since
Bob Levine 76 Director December 7, 2018
Joseph Sierchio 76 Director October 1, 2020
Timothy Bullinger 69 Director March 15, 2024
Business Experience
Set forth below are the names of all our directors
and executive officers, all positions and offices held by each person, the period during which each has served as such, and the principal
occupations and employment of such persons during at least the last five years, and other director positions held currently or during
the last five years:
Current Directors and Officers
Amit Singh. Has served as the Company’s
Vice President since February 2021, President and CEO since May 1, 2024, and as a director since August 1, 2025. Mr. Singh has diverse
experience with incubating and developing ventures in cleantech and renewables, biomedical devices, drug discovery and development, and
financial marketing and advertising. From June 2006 to May 2008, Mr. Singh served as a Risk and Strategy Consultant at Crowe, where he
specialized in identifying high-risk areas for public and private companies, specifically detecting weaknesses in business models and
helping develop, re-engineer, and implement core business processes. From September 2007 to March 2018, Mr. Singh served as the Executive
Director of Sikhcess, a non-profit, where he coordinated the efforts of more than 5,000 global volunteers to break the cycle of homelessness
by providing meals, basic needs, education, mentoring, tutoring, and support. Mr. Singh earned his MBA from the University of Michigan
in 2006, and an undergraduate business degree from Wayne State University in 2003.
Bob Levine. Mr. Levine has been with Avison Young since 1994 and
is one of the founding partners of the company which has 120 offices in 25 countries and 5,000 real estate professionals. Since 2008,
Avison Young has been one of the fastest growing commercial real estate companies in the world. Having retired from the Board of Avison
Young after 10 years’ service, and recently retired from Avison Young’s Executive Committee, Mr. Levine has 40 years of experience
in commercial real estate sales, leasing, and advisory roles and has worked with many leading developers, equity partners, and renowned
investors. Having consummated many billions of dollars in transactions, he has been responsible for the sale of numerous landmark and
Class-A office buildings, shopping centers, industrial properties, and major development sites.
Joseph Sierchio. Mr. Sierchio has been engaged in the practice
of law as the principal of Sierchio Law LLP, our general corporate counsel since August 2019; prior thereto Mr. Sierchio provided legal
services to the Company as a partner of Satterlee Stephens LLP, our counsel, from September 2016 to August 2019. Since 1975, Mr. Sierchio
has continuously practiced corporate and securities law in New York City, representing, in the United States, domestic and foreign private
and public corporations, investors, brokerage firms, and entrepreneurs. Mr. Sierchio is admitted in all New York state courts and federal
courts in the Eastern, Northern, and Southern Districts of the State of New York as well as the federal Court of Appeals for the Second
Circuit. Mr. Sierchio was invited to join the Board due to his experience representing corporations (public and private) and individuals
in numerous and various organizational, compliance, administrative, governance, finance (equity and debt private and public offerings),
regulatory and legal matters as well as his familiarity with the Company’s business and operations. Mr. Sierchio also served as
a director of RenovaCare, Inc. from August 26, 2010, to June 22, 2018. Mr. Sierchio earned his J.D. at Cornell University Law School in
1974, and a B.A., with Highest Distinction in Economics from Rutgers College at Rutgers University in 1971, and where he was also named
a Henry Rutgers Scholar.
41
Timothy Bullinger. Mr. Bullinger is founder and principal of Arca3
Design Studio Inc., an architecture, interior and landscape design firm. He has served as its president since its formation in 1996. Mr.
Bullinger has more than 40 years of experience in architecture and environmental design integrating natural and advanced energy sources
including solar, geothermal, wind, and grey water heat recovery systems and developing and incorporating alternate thermal mass materials
as part of passive solar systems integrated into his residential and commercial designs. Mr. Bullinger's integration of renewable technologies
in architecture has been featured prominently in his bespoke luxury designs. Mr. Bullinger’s expertise also includes the use of
specialty glass coating technologies for integration into his designs for residences, estates, hotels, restaurants, spas, yachts and private
aircraft. Since 1990, Mr. Bullinger has collaborated with iconic luxury brands including Rolls Royce, Jack Nicklaus, Hermes, Subzero Wolf,
Samsung, and Dacor, and worked across the globe, including Beverly Hills, Honolulu, Tokyo, Hong Kong and Paris.
Justin Frere, CPA. Mr. Frere has served as the Company’s Controller
since August of 2011 and was appointed Secretary and Interim Chief Financial Officer on July 5, 2019, and July 22, 2020, respectively.
Mr. Frere has over 20 years of experience as a hands-on CFO/Controller level finance and administration professional with extensive operational
and analytical experience as a consultant, CFO, and controller for numerous public entities. From 2001 through present, Mr. Frere has
been principal of Frontline Accounting performing CFO/controller, and financial analyst services for various public and private domestic
and international clients. Mr. Frere has been the primary party responsible for accounting, drafting, and filing SEC Forms and interacting
with auditors and the SEC in support of public company reporting. Mr. Frere started his career at KPMG in their assurance practice. Mr.
Frere earned a Bachelor of Science in accounting and finance from California Polytechnic State University in San Luis Obispo and MBA from
San Diego State University.
All our directors are elected annually to serve for
one year or until their successors are duly elected and qualified.
Family Relationships and Other Matters
There are no family relationships between any of our
officers and directors.
Legal Proceedings
None of our directors or officers are involved in any
legal proceedings as described in Regulation S-K (§229.401(f)).
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Because we do not have a class of equity securities
registered pursuant to section 12 of the Exchange Act, we are not required to make the disclosures required by Item 405 of Regulation
SK.
CORPORATE GOVERNANCE
General
We believe that good corporate governance is important
to ensure that our company is managed for the long-term benefit of our stockholders. We periodically review our corporate governance policies
and practices and compare them to those suggested by various authorities in corporate governance and the practices of other public companies.
As a result, we have adopted policies and procedures that we believe are in the best interests of the Company and our stockholders.
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Corporate Governance Guidelines; Code of Conduct and Ethics; Amended and Restated Insider
Trading Policy
Our Corporate Governance Guidelines assist our
Board of Directors in the exercise of its duties and responsibilities and to serve the best interests of SolarWindow® and our stockholders.
These guidelines, which provide a framework for the conduct of our Board business addresses the role of a director, Board composition,
Board meetings, access to management, Board compensation and other topics.
We have adopted a Code of Ethics that applies to all of our officers, directors
and employees, including our Acting Principal Executive Officer. The Code of Ethics is designed to deter wrongdoing, and to promote, among
other things, honest and ethical conduct, full, fair, accurate, timely, and understandable disclosure in reports and documents that we
file with, or submit to the SEC, compliance with applicable governmental laws, rules and regulations, the prompt internal reporting of
violations of the Code of Ethics, and accountability for adherence to the Code of Ethics.
We have adopted an Amended and Restated Insider Trading Policy (the “ITP”)
that applies to all officers, directors, employees, and other persons, such as contractors or consultants who have access to material
nonpublic information. The ITP also applies to family members, other members of a person’s household and entities controlled by
a person covered by the ITP. The purpose of the ITP is to provide guidelines with respect to transactions in the Company’s securities
and the handling of material nonpublic information about the Company and the companies with which the Company does business. The Company’s
Board has adopted this Policy to promote compliance with federal, state and foreign securities laws that prohibit certain persons who
are aware of material nonpublic information about a company from: (i) trading in securities of that company; or (ii) providing material
nonpublic information to other persons who may trade on the basis of that information. Oversight and implementation of the ITP is performed
by the Board and Interim CFO.
We have posted a copy of our Corporate Governance
Guidelines, Code of Ethics and Business Conduct, and Amended and Restated Insider Trading Policy on the Investor section of our website
at https://www.solarwindow.com/investors/corporate-governance/. Our full Board must approve any waivers of the Code of Ethics. We will
post any amendments or waivers from our Code of Ethics that apply to our executive officers and directors on the “Corporate Governance”
section of our website.
Board Independence
We are not listed on a major U.S. securities exchange
and, therefore, are not subject to the corporate governance requirements of any such exchange, including those related to the independence
of directors. However, Our Board considers that a director is independent when the director is not an officer or employee of the Company,
does not have any relationship which would, or could reasonably appear to, materially interfere with the independent judgment of such
director, and the director otherwise meets the independence requirements under the listing standards of FINRA and the rules and regulations
of the SEC. Our Board has reviewed the materiality of any relationship that each of our directors has with the Company, either directly
or indirectly. Based on this review, our Board has affirmatively determined that two of our three directors, including Bob Levine and
Timothy Bullinger, qualify as an “independent” director.
Board Leadership Structure
We currently have one executive officer, the Interim
CFO and Secretary, and four directors; two of which are independent. At present, Mr. Amit Singh serves as our Chief Executive Officer
and Director.
Our Bylaws provide our Board with flexibility
to combine or separate the positions of Chairman of the Board and Chief Executive Officer in accordance with its determination that utilizing
one or the other structure would be in the best interests of our Company and its stockholders. Our board has reviewed our current Board
leadership structure, our size, the nature of our business, the regulatory framework under which we operate, our stockholder base, our
peer group and other relevant factors, and has determined that this structure is currently the most appropriate Board leadership structure
for our company.
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Board Committees
Audit Committee
The Audit Committee is a standing committee of the Board established in accordance with Section
3(a)(58)(A) of the Exchange Act. The Audit Committee’s principal purposes are to oversee, on behalf of the Board, the
accounting and financial reporting processes of the Company and the audit of the Company’s financial statements. As described in
its charter, the Audit Committee’s responsibilities include assisting the Board in overseeing: (i) the integrity of the Company’s
financial statements; (ii) the independent auditor’s qualifications and independence; (iii) the performance of the Company’s
independent auditor and the Company’s internal audit function; (iv) the Company’s compliance with legal and regulatory
requirements, and (v) the Company’s systems of disclosure controls and procedures, and internal control over financial reporting.
Robert Levine currently
serves as Chair, and Joseph Sierchio and Timothy Bullinger currently serve as members of the Audit Committee. The Board has
determined that two of the members of the Audit Committee are independent under Rule 5605 of the Nasdaq Stock Market, Inc.
Marketplace Rules, and the rules of the SEC regarding audit committee membership. The Board has determined that it currently
has no “audit committee financial expert” as defined in Item 407(d) of Regulation S-K under the Exchange
Act.
Compensation Committee
The Board does not currently have a standing Compensation Committee. The
full Board establishes our overall compensation policies and reviews recommendations submitted by our management.
Nominating Committee
The board does not currently have a standing Nominating Committee. We do
not maintain a policy for considering nominees. Our Bylaws provide that the number of Directors shall be fixed from time to time by the
Board, but in no event shall the number of directors be less than the minimum required by law. The Board should be large enough to maintain
our required expertise but not too large to function inefficiently. Director nominees are recommended, reviewed, and approved by the entire
Board. The Board believes that this process is appropriate due to the number of directors on the Board and the opportunity to benefit
from a variety of opinions and perspectives in determining director nominees by involving the full Board.
While the Board is solely responsible for the selection and nomination of
directors, the Board may consider nominees recommended by stockholders as deemed appropriate. The Board evaluates each potential nominee
in the same manner regardless of the source of the potential nominee’s recommendation. Although we do not have a policy regarding
diversity, the Board does take into consideration the value of diversity among Board members in background, experience, education, and
perspective in considering potential nominees for recommendation to the Board for selection. Stockholders who wish to recommend a nominee
should send nominations to Mr. Justin Frere, Interim CFO and Secretary, 9375 E. Shea Blvd., Suite 107-B, Scottsdale, AZ 85260, that includes
all information relating to such person that is required to be disclosed in solicitations of proxies for the election of directors. The
recommendation must be accompanied by the written consent of the individual to stand for election if nominated by the Board and to serve
if elected.
Compensation Consultants
We have not historically relied upon the advice of compensation consultants
in determining Named Executive Officer compensation. Instead, the Board reviews compensation levels and makes adjustments based on their
personal knowledge of competition in the marketplace, publicly available information, and informal surveys of human resource professionals.
Board Meetings, Committees of the Board of Directors, and Annual Meeting Attendance
During the fiscal year ended August 31, 2025, all directors attended
the meetings of the Board. The Board met six (6) times and acted by written consent thirteen (13) times during the fiscal year ended August
31, 2025. We did not have an annual meeting of shareholders during the fiscal year ended August 31, 2025, or 2024.
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Board Role in Risk Oversight
Risk is inherent in every business, and how well a business manages risk
can ultimately determine its success. We face a number of risks, including strategic risks, enterprise risks, financial risks, and regulatory
risks. While our management is responsible for day-to-day management of various risks we face, the Board, as a whole, is responsible for
evaluating our exposure to risk and to satisfy itself that the risk management processes designed and implemented by management are adequate
and functioning as designed. The Board reviews and discusses policies with respect to risk assessment and risk management. The Board also
has oversight responsibility with respect to the integrity of our financial reporting process and systems of internal control regarding
finance and accounting, as well as its financial statements.
ITEM 11. EXECUTIVE COMPENSATION
Summary Compensation Table
The following
table sets forth compensation information for the two fiscal years ended August 31, 2025 and 2024 of the Company’s Chief Executive
Officer who served as vice president prior to their appointment as CEO, and Interim Chief Financial Officer (the “Named Executive
Officers”). Elements of compensation for our Named Executive Officers
include salary and stock option awards. We do not have a pension plan.
(4) Effective May 1, 2024, the Company and Amit Singh entered
into an employment agreement (the “Offer Letter”) whereby Mr. Singh will serve as the Company’s President and
Chief Executive Officer. Pursuant to the Offer Letter, in exchange for his full-time efforts, Mr. Singh will receive an annual base salary
of $240,000 and a non-statutory stock option with a fair value of $0.33 per share to purchase up to 500,000 shares of the Company’s
Common Stock, at an exercise price of $0.33, term of five (5) years, vesting as to 50% on the date of grant (May 14, 2024) and 50% on
the one-year anniversary of date of grant. Pursuant to the Offer Letter, Mr. Sing’s relationship with the Company is at-will and
subject to termination upon written notice by either party. Effective July 28, 2020, the Company, Mr. Singh, and Damaak Group, LLC, a
U.S. entity wholly-owned by Mr. Singh (“Damaak”), entered into a Business Consulting Agreement (the “BCA”)
whereby Mr. Singh supported the executive management team with corporate finance, business development, media & public relations,
brand positioning, technology, and investor engagement. Under the BCA, which had an initial term of two (2) years, Damaak was paid a monthly
fee of $15,000 effective January 2021. The aggregate grant date fair value of the stock option award was determined in accordance with
FASB ASC Topic 718. For additional information, see “NOTE 7 – Stock Options” of our notes to financial statements contained
in this annual report.
(2) Mr. Frere has served as the Company’s Controller since
August of 2011 and was appointed Secretary on July 5, 2019. Effective July 23, 2020, Mr. Frere was appointed to also serve as the Company’s
Interim Chief Financial Officer and Treasurer. Mr. Frere is providing his services pursuant to an at-will executive services agreement
(the “ESA”) dated November 1, 2023 on an as needed basis. Mr. Frere’s engagement is at will and can be terminated
by either party on notice. On April 8, 2024, Mr. Frere received a non-statutory stock option with a fair value of $0.33 per share to purchase
up to 75,000 shares of the Company’s Common Stock at an exercise price of $0.33, term of five (5) years, vesting as to 50% on the
date of grant (May 14, 2024) and 50% on the one-year anniversary of the date of grant. The aggregate grant date fair value of the stock
option award was determined in accordance with FASB ASC Topic 718. For additional information, see “NOTE 7 – Stock Options”
of our notes to financial statements contained in this annual report.
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Outstanding Equity Awards at Fiscal-Year End
The following table sets forth information regarding equity awards that
have been previously awarded to each of the Named Executives and which remained outstanding as of August 31, 2025.
Option Awards
(1) In exchange for services, the Company granted the following
stock options: 1) 500,000 options with a fair value of $0.33 per share granted on May 14, 2024, at an exercise price of $0.33 per share,
term of five (5) years and vesting as to 50% on the date of grant and 50% on the one-year anniversary of the date of grant, and 2) 15,000
options with a fair value of $4.92 per share granted on October 27, 2021, at an exercise price of $6.21 per share, term of ten (10) years
and vesting as to 50% six months from the date of grant and 50% on the one-year anniversary of the date of grant. For additional information,
see “NOTE 7 – Stock Options” of our notes to financial statements contained in this annual report.
(2) In exchange for services, the Company granted the following
stock options: 1) 75,000 options with a fair value of $0.33 per share granted on April 8, 2024, with an exercise price of $0.33 per share,
term of five (5) years and vesting as to 50% on the grant date and 50% on the one-year anniversary of the grant date, and 2) 50,000 options
with a fair value of $4.92 per share granted on October 27, 2021, at an exercise price of $6.21 per share, term of ten (10) years and
vesting as to 50% six months from the date of grant and 50% on the one-year anniversary of the date of grant. For additional information,
see “NOTE 7 – Stock Options” of our notes to financial statements contained in this annual report.
Termination and Change of Control
Not applicable.
Option Exercises and Stock Vested
Not applicable.
COMPENSATION OF DIRECTORS
Our directors play a critical role in guiding our
strategic direction and overseeing the management of our Company. Ongoing developments in corporate governance and financial reporting
have resulted in an increased demand for such highly qualified and productive public company directors. The many responsibilities and
risks and the substantial time commitment of being a director of a public company require that we provide adequate incentives for our
directors’ continued performance by paying compensation commensurate with our directors’ workload. Our non-employee directors
are compensated based upon their respective levels of Board participation and responsibilities, including service on Board Committees.
Our employee directors receive no separate compensation for their service as directors. Our Board determines the non-employee directors’
compensation for serving on the Board and its committee(s). In establishing director compensation, the Board is guided by the following
goals:
· compensation should assist with attracting and retaining qualified directors.
For their services as directors, non-employee directors
received cash compensation of $2,500 per quarter during fiscal 2025 and 2024.
No equity-based grants were awarded to the other Board
members in fiscal 2023. During fiscal 2024, the Company granted 200,000 options to each of the three directors. The options fair value
was calculated to be $0.33 per share using the Black-Scholes Option Pricing Model.
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Director Compensation Table
The following table sets forth the compensation earned
by each non-employee director for service as a director during Fiscal 2025 and 2024:
Name Fees Earned or Paid in Cash ($) Stock Awards ($) (1) Total ($)
(1) For their services on the Board, on April 8, 2024, the Company
granted each of its three directors an option with a fair value of $0.33 per share to purchase 200,000 shares of Common Stock at an exercise
price of $0.33 per share, term of five (5) years, vesting as to 50% on the date of grant and 50% on one-year anniversary of the date of
grant. The aggregate grant date fair value of the stock option award was determined in accordance with FASB ASC Topic 718. For additional
information, see “NOTE 7 – Stock Options” of our notes to financial statements contained in this annual report.
Director Compensation - Equity
The following table shows the total number of unvested and total option
awards held by each of our non-employee directors as of August 31, 2025:
Name Vested Stock Options Outstanding (#) Unvested Stock Options Outstanding (#)
(1) Includes the following option grants: 1) 30,000 options
granted on October 27, 2021 with a ten (10) year life and exercise price of $6.21 per share, and 2) 200,000 options granted on April 8,
2024 with a five (5) year life and exercise price of $0.33 per share with 100,000 vested as of the date of this annual report on form
10-K. For additional information, see “NOTE 7 – Stock Options” of our notes to financial statements contained in this
annual report.
(2) Includes the following option grants: 1) 20,000 options
granted on November 21, 2017 with a ten (10) year life and exercise price of $4.87 per share; 2) 50,000 options granted on October 19,
2020 with a six (6) year life and exercise price of $3.42 per share, 3) 15,000 options granted on October 27, 2021 with a ten (10) year
life and exercise price of $6.21 per share, and 4) 200,000 options granted on April 8, 2024 with a five (5) year life and exercise price
of $0.33 per share with 100,000 vested as of the date of this annual report on form 10-K. For additional information, see “NOTE
7 – Stock Options” of our notes to financial statements contained in this annual report.
(3) Includes 200,000 options granted on April 8, 2024 with a
five (5) year life and exercise price of $0.33 per share with 100,000 vested as of the date of this annual report on form 10-K. For additional
information, see “NOTE 7 – Stock Options” of our notes to financial statements contained in this annual report.
Limitation on Directors' Liabilities; Indemnification of Officers and Directors
Our Amended and Restated Bylaws designate the relative
duties and responsibilities of our officers and establish procedures for actions by directors and stockholders and other items. Our bylaws
also contain extensive indemnification provisions, which will permit us to indemnify our officers and directors to the maximum extent
provided by Nevada law. For additional information, see Exhibit 4.34 to this Annual Report.
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Directors' and Officers' Liability Insurance
We have obtained directors' and officers' liability insurance, which expires
on September 30, 2026.
Granting Certain Equity Awards Close in Time to the Release of Material Nonpublic Information
We do not grant equity awards in anticipation
of the release of material nonpublic information that is likely to result in changes to the price of our Common Stock, and do not time
the public release of such information based on award grant dates. During the last completed fiscal year, we have not made awards
to any named executive officer or director during the period beginning four business days before and ending one business day after the
filing of a Quarterly Report on Form 10-Q or our Annual Report on Form 10-K or the filing or furnishing of a Current Report on Form 8-K,
and we have not timed the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
The following table sets forth certain information as of the date of this
annual report, by (i) all persons who are known by us to beneficially own more than 5% of our outstanding shares of Common Stock, (ii)
each director, director nominee, and Named Executive Officer; and (iii) all executive officers and directors as a group. To our knowledge,
no other person beneficially owns more than 5% of our Common Stock.
Directors and Officers
All Directors and Officers as a Group 3,117,843 4.63
5% Shareholders
* less than 1%
(1) Beneficial ownership is determined in accordance with SEC rules and generally
includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and
sole voting power and investment power with respect to the shares of our Common Stock and except as indicated the address of each beneficial
owner is 9375 E Shea Blvd., Suite 107-B, Scottsdale, AZ 85260.
(2) Calculated pursuant to rule 13d-3(d) of the Exchange Act. Beneficial ownership
is calculated based on 65,779,045 shares of Common Stock issued and outstanding as of the date of this annual report Under Rule 13d-3(d)
of the Exchange Act, shares not outstanding which are subject to options, warrants, rights, or conversion privileges exercisable within
60 days are deemed outstanding for the purpose of calculating the number and percentage owned by such person, but are not deemed outstanding
for the purpose of calculating the percentage owned by each other person listed.
(3) Includes 276,000 shares of Common Stock, 33,333 shares of Common Stock reserved
for issuance upon the exercise of a Series T Warrant and 230,000 shares of Common Stock reserved for issuance upon the exercise of vested
stock options.
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(4) Includes 1,446,567 shares of Common Stock and 285,000 shares of Common Stock
reserved for issuance upon the exercise of vested stock options.
(5) Includes 200,000 shares of Common Stock reserved for issuance upon the exercise
of vested stock options.
(6) Includes 515,000 shares of Common Stock reserved for issuance upon the exercise
of vested stock options.
(7) Includes 6,493 shares of Common Stock and 125,000 shares of Common Stock reserved
for issuance upon the exercise of vested stock options.
(8) Includes 90,000 shares of Common Stock and 3,623,000 shares of Common Stock reserved
for issuance upon the exercise of vested stock options.
(9) Includes 2,016,129 shares of Common Stock and 2,016,129 shares of Common Stock
reserved for issuance upon the exercise of a Series U-OS Warrant.
(10) Includes 3,225,806 shares of Common Stock and 3,225,806 shares of Common Stock
reserved for issuance upon the exercise of a Series U Warrant.
(11) Silica Holding B.V. is a foreign corporation domiciled in the Netherlands and
wholly owned by Francisco Javier Bono Perez. In such capacity Mr. Perez may be deemed to have beneficial ownership of these shares. The
number of shares reflected above includes 3,225,806 shares of Common Stock and 3,225,806 shares of Common Stock reserved for issuance
upon the exercise of a Series U-OS Warrant.
(12) Kalen Capital Corporation is a private Alberta corporation wholly owned by Mr.
Harmel Rayat. In such capacity, Mr. Rayat may be deemed to have beneficial ownership of these shares. The number of shares reflected above
is based upon the review of our transfer records and information provided to us by Kalen Capital Corporation and includes: (a) 34,138,931
shares owned by Kalen Capital Corporation and its wholly owned subsidiary; and (b) 16,566,667 shares issuable upon exercise of a Series
T Warrant.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,
AND DIRECTOR INDEPENDENCE
The Board establishes policies and procedures, and
sets standards regarding operations and governance. Accordingly, the Company adopted a policy and procedures pertaining to related-party
transactions (“RPTs”) as they relate to the Company’s employees, officers and directors.
The Board recognizes that RPTs must be managed to
prevent the risk of perceived or actual conflicts of interest. The Company’s RPT policy and procedures addresses these transactions
as they may occur. The Board is responsibe for reviewing and approving RPTs in accordance with the adopted policy and procedures. The
Board may review the RPT policy and procedures from time to time and accordingly recommend amendments for consideration and/or implementation.
The Board will review and approve all RPTs over $25,000
with the option to review and approve all RPTs if, in their judgment, it would be in the best interests of the Company for the proposed
transaction to be reviewed.
Under SEC rules (Section 404 (a) of Regulation S-K),
a related person is a director, officer, nominee for director, or 5% stockholder of our outstanding shares of Common Stock since the beginning
of the previous fiscal year, and their immediate family members. Immediate family members include spouses, parents, stepparents, children,
stepchildren, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law and anyone residing
in such person’s home (other than a tenant)
The Board has determined that, barring additional
facts or circumstances, a related person does not have a direct or indirect material interest in the following categories of transactions:
· compensation to executive officers determined by the Board;
· compensation to directors determined by the Board;
· transactions in which all security holders receive proportional benefits; and
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The Board reviews transactions involving related persons
who are not included in one of the above categories and makes a determination whether the related person has a material interest in a
transaction and may approve, ratify, rescind, or take other action with respect to the transaction in its discretion. The Board reviews
all material facts related to the transaction and takes into account, among other factors it deems appropriate, whether the transaction
is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances; the
extent of the related person’s interest in the transaction; and, if applicable, the availability of other sources of comparable
products or services. An interested related party who serves on the Board shall recuse their self from the review and approval of a RPT
in which they have an interest in the transaction.
Our employees are expected to disclose personal interests
that may conflict with ours and they may not engage in personal activities that conflict with their responsibilities and obligations to
us. Periodically, we inquire as to whether or not any of our Directors have entered into any transactions, arrangements or relationships
that constitute related party transactions. If any actual or potential conflict of interest is reported, our Board will review the transaction
and relationship disclosed and make a determination regarding appropriatness and recommend modifications to the RPT if the transaction
is deemed to present a conflict of interest.
Transactions with Related Persons
The following is a description of each transaction since the beginning
of fiscal 2024, and each currently proposed transaction, in which:
• we have been or are to be a participant;
For additional information, please refer to see “NOTE
8 – Transactions with Related Persons” under the Notes to Financial Statements for the Years Ended August 31, 2025, and 2024.
Director Independence
Please refer to “Director Independence” under the section titled
“CORPORATE GOVERNANCE” in “ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.”
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
INDEPENDENT PUBLIC ACCOUNTANTS
PKF O’Connor Davies, LLP (“PKF”)
currently serves as our independent registered public accounting firm to audit our financial statements for the fiscal year ending August